Debt Collection – You have rights!

debt_collector_-_Google_SearchBy David Nelson, CFA

An 84 year old woman contacted by a California debt collection firm is told they represent a bounty hunter and that an arrest warrant has been issued for her daughter. The lie was an attempt to get her to pay a debt she didn’t even owe.  Unfortunately, this is just one of many stories revealed recently by the Federal Trade Commission which has launched “Operation Collection Protection” a coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices.

CBS reported that the FTC received a temporary restraining forcing the firm above BAM Financial to shut down.

With over 30 million Americans in debt collection it’s not surprising that some collection firms would push the envelope moving outside the law to drive the bottom line. Reports of firms using illegal and harassing techniques to frighten consumers into paying are commonplace. 

David lower third Gov't Cracks DownIn a recent interview with Fox News anchor Eric Shawn I said the problem is even bigger than many believe. Some firms troll for information using stolen social security numbers or outdated information. The tragedy here is that some pay out even when they don’t owe money.

During a press conference announcing the operation, Elizabeth Ramirez Chairwoman of the FTC said, “Being in debt is stressful enough for many Americans without also being subjected to intimidation and false statements.” She went on to say, “The lawful collection of debt plays an important role in our credit system, and there are many collection agencies operating legally.”

Look, if you get a call from a collection agency and you believe the debt is legitimate then of course try to make arrangements to pay in a fashion that works for you. But know You Have Rights!

  • They can’t harass or threaten you
  • The can’t call before 8AM or after 9PM at night
  • The can’t call you at work if your employer doesn’t permit it
  • If you don’t want them to contact you then you must notify them in writing
  • They can’t pretend to be attorney’s or government representatives
  • The only way your wages can be garnished is through court order
  • Make sure they send you a validation notice confirming the debt

One tactic often used by debt firms is to contact friends and family. Know this, they can’t discuss your debt with anyone other than you or your attorney. They can contact third parties to get location information like your home and work address.

Not paying debt can have consequences. Your credit rating could suffer which in some cases can make it harder to find a job. Know your rights and don’t be afraid to exercise them.

federal_trade_commission_-_Google_SearchGovernment agencies can be a help. If you feel that a debt collection agency is threatening you or in some other fashion breaking the law, contact your State Attorney General’s Office. Also contact the Federal Trade Commission.

The crackdown is staring to draw blood. In one case debt collection firm K.I.P. LLC was forced to pay a $6.4 million judgement.

A few more things to remember

It’s important to know that many federal benefits are exempt from garnishment. These include Social Security and Veteran’s Benefits.

If you borrowed money remember, you didn’t borrow from a loan shark. This isn’t a gangster movie. A mafia collector often referred to as a leg breaker can’t come after you threatening physical harm. You have rights and a legal system just a phone call away.